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Posted on Thursday, April 19, 2018

Solicitation Ambiguities and Defects Resulting from Agency Discussions Must be Raised Prior to Submission of Proposals

Bidders don’t often consider that information they learn through discussions could trigger the need to file a pre-award protest, even when that information is not included in a solicitation amendment. If an agency communication conflicts with the solicitation’s terms, a bidder must protest this ambiguity before closing time for proposals.

GAO recently dismissed a protest that the agency’s price evaluation was based on unstated evaluation criteria as untimely, where the protestor learned of agency’s intent to use this methodology during discussions.

Umicore Optical Materials USA Inc. (Umicore) raised several challenges to the Defense Logistic Agency’s (DLA) award of a contract for storage and rotation of unfinished geranium wafers to 5N Plus Semiconductors LLC (5N). The award was to be made to the technically acceptable offeror with the lowest evaluated total price.

DLA determined that the proposals of both 5N and Umicore, the only two offerors, were technically acceptable. However, when DLA went to evaluate the pricing, it realized that 5N and Umicore had proposed prices based on different understandings of the RFP, and thus were not easily comparable to each other.

The contracting officer sent each offeror a spreadsheet representing what the contracting officer believed was each offerors’ pricing, including a price per wafer and total price. The contracting officers calculated Umicore’s total price to be $4,058,649, and 5N’s total price to be $13,268,272. The contracting officer provided this spreadsheet along with an email that stated:

The pricing structure provided on Standard Form 1449 will be used at time of award. However, DLA wants to clarify price per wafer. The attached spreadsheet was developed to get a better understand[ing] of your pricing proposal. If DLA misrepresented your pricing structure, please correct.

Umicore provided a corrected version of the agency’s spreadsheet, which showed its total price to still be $4,058,649, but included a price per wafer. 5N provided a corrected version of the agency’s spreadsheet, which showed a new total price of $4,620,277, and changed its price per wafer.

However, the contracting officer still was concerned that the offerors had different understanding of the statement of work. This resulted in several rounds of additional communications between the contracting officer and the offerors, and ultimately led to the contracting officer calling both offerors to clarify pricing.

According to Umicore, the contracting officer explained in the telephone call that she was “trying to put prices on a ‘per wafer” basis in order to compare offers.” Umicore responded by providing a revised spreadsheet, which reflected a total price of $5,740,664. 5N confirmed its total price of $4,620,277. The contracting officer determined that after this round of exchanges, the offerors correctly understood the contract requirements and awarded the contract to 5N based on its lower price.

Umicore protested, arguing that the agency improperly evaluated proposals using an unstated evaluation factor – specifically, that it evaluated pricing based on a price per wafer rather than a total evaluated price basis. Umicore also argued that it was unreasonable for the agency to conduct a price per wafer comparison, because the solicitation allowed offerors to propose wafers of different thicknesses, which would impact the number of wafers needed to perform the contract.

The agency sought to dismiss these protest grounds as untimely. Umicore responded that these grounds were timely, because they were filed within 10 days of its debriefing. GAO agreed with the agency and dismissed Umicore’s challenges to the price evaluation.

Because Umicore was informed of the agency’s decision to use the price per wafer methodology during discussions, GAO determined that Umicore’s protest that the agency used unstated evaluation criteria was really a protest of a patent ambiguity. A patent ambiguity exists when the solicitation contains an obvious error. GAO stated that “[w]hen a communication from a contracting officer – even if not designated a solicitation amendment – conflicts with the plain language of the solicitation, the ambiguity created is a patent ambiguity.” Thus, GAO concluded, to the extent Umicore believed the agency’s price evaluation methodology was incompatible with the solicitation, Umicore was required to file its protest before the closing time for receipt of proposals.

GAO also held that Umicore’s argument that a price per wafer evaluation was an unreasonable method for evaluating price where the solicitation allowed for wafers of varying thickness was an untimely challenge to solicitation terms, and dismissed this challenge as well.

This protest serves as a cautionary tale to bidders that information provided by the agency at any point during the procurement that conflicts with stated solicitation terms can trigger the need for a pre-award protest, even if that information does not come via a formal solicitation amendment.

Berenzweig Leonard is teaming up with Red Team Consulting for a monthly newsletter featuring upcoming contracts, key protest decisions, events, and more. This post was published in the April 2018 Monthly Insights newsletter. To sign up for Monthly Insights, please click here.